There’s no question that we have lots of wealthy people in the USA. But all this talk about how much of the country’s wealth the top 1% and the top 15% are worth is pretty shaky, because no one actually knows. Remember there are about 312 million people in this country, so to get an accurate total of the wealth of the top 3, 120,000 people (that’s 1 %) or the top 46,000,000 people (15%) you would have to know each persons wealth figure and then add them up. Then to figure out what percent this is you would have to divide that number by the total wealth of the whole country…do you know what that is? No? Well welcome to the club, because no one else knows either. The only other way to find out is to estimate (more on that below).
Doesn’t sound so easy now does it?
Don’t confuse wealth with income. Not the same thing at all. Income is the money we have coming in each year from a variety of sources. That’s pretty easy to track because we have to file income tax forms every year. Income is not wealth. If you make $50,000 in a year, but also spend $50,000, you have no wealth unless you have acquired assets. So if you spent part of the $50,000 to buy a car, now your wealth is the value of the car. If you spent part of the $50,000 to go on vacation, all you have is pleasant memories. Vacations don’t accumulate wealth.
You figure out your wealth by adding up the value all your assets (house, car, investments, jewelry, pots and pans, etc.) and than subtracting the value of all your debts (mortgage, other loans, taxes, etc.). What you are left with is your wealth. Over time, saving, investing, starting a business, buying property, etc., are things that can help you accumulate wealth. Generally wealth doesn’t happen fast unless your a rock star or a professional athlete. Families who are very wealthy have, in many cases, accumulated their wealth over several generations.
The President often talks about higher taxes on the “wealthy”, but that’s not what he means. He means higher taxes for people who have income tax returns over a certain figure ($200,000 or $250,000). He might want to tax “millionaires and billionaires”, but he’s really going to tax a bunch of people who don’t have anything like that kind of money. Also, some people might make the cut ($200,000) one year, but miss it by a large number the next year. Are they still rich?
Every three years the Board of Governors of the Federal Reserve System does a survey of the financial demographics of American families. Currently this survey called “Survey of Consumer Finances” can choose from a little over 100 million families in the US. Almost everything we read which quotes wealth numbers about the top 1%, 19% 15% and the bottom 50% and 90% originates from these surveys. What’s frightening about this is that only 4,449 families (of all wealth levels) were interviewed for this survey. The SCF statistics, by all accounts, are well regarded…still how comfortable do you feel about a .004449 sampling?
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